Vishnu Prakash R Punglia Limited IPO Summary | CA Rachana Ranade

"Now if you see there are two years which have been discussed in the RHP one is 2025 scenario ne is 2050 scenario. Now if I talk about irrigation you can see that 611 billion cubic meters is the requirement for water and which is expected to go to 807 billion cubic meters, now you can see that different figures are even given for domestic usage, for industrial usage, for power usage, for other usage and even if you check in totality the requirement is going to shoot up from 843 billion cubic meters to 1180 billion cubic meters."

"Now if I'm talking about the company there could be again two parts one is litigation on the company or it could be litigation by the company similarly if I'm talking about directors and promoters because it could be litigation against the directors and promoters and it could be litigation and litigation by the promoters and directors but how much are the figures for that have a look at this chat. Now if you see here in both the cases be it company or directors and promoters whatever is the amount which is involved which is against their company that is a comparatively smaller amount you can see in case of company by the company is 1,045 million rupees but against he company is barely 28.77 million. Directors and Promoters even this number is pretty small it's just 1.26 million rupees, but what has been given additionally in the RHP is that the company has not incurred any material penalties or fines in the last three financial years but if that happens if something oes against the company then it may have an adverse effect on the company in the future, in fact the RHP also mentions that if certain ruling goes against the company the company may be debarred from participating in any future tenders which are floated."

"but you can see that the cash flow from operating activities has been reducing it has gone down from 348 millions to 33 millions negative to 84 millions negative just rounding of the numbers but then when I try to check in the prospectus if the company has given any specific reason for that it is mentioned that since the company is in the growth phase working capital requirements are high and that is one of the reasons why the operating activities cash flow has gone negative."

"second risk can come from a business segment segment concentration risk now what is that if you remember I told you that almost 85 86 percent of the revenue was generated only from water supply projects so this is what this is again a concentration but this a business segment concentration, third one can be like a client concentration remember I told you that almost 99% revenue is generated only from government so that is what that is a client concentration risk and also 80.92% of the revenue has been generated only from top five clients so all these three risks that I talked about the first one was a geographical concentration risk which was about Rajasthan, second one is about business concentration risk which was about water supply projects, third one is client concentration risk that was about the government 99% and top 5 clients risk."

"now this ratio has gone up from 3.22 to 4.85 and has then come down to 2.98, now why am I discussing this entire point many people feel that if the order book is of let us say XYZ rupees that will be the guaranteed sale in the coming future in the immediate next year that will not happen order book will be split up into sales in the coming few years so you have to understand that you have to calculate order book to sales and then understand that order book is not a guarantee of future revenue."

"You can imagine something like this long implementation period let's take an example of three years for an implementation period so when is the project going to be completed after three years but they have taken a short-term financing for this which has to be repaired let's say within a year because as you can see the figures short-term borrowing is way higher than the long-term borrowings, now could this lead to a mismatch what sort of mismatch they have to pay the liability within a year let us say but they may get a major chunk of money from the project let's say after three years now could that lead to a cash Crunch and answer is yes and that is the reason why the company also mentions in the RHP that a failure to renew the arrangements for existing funding or obtain additional financing on acceptable terms in a timely manner it could have an adverse impact on any planned capital expenditure and ultimately it could also impact the revenue of the company."

"Now let's understand what is the company going to do with this money the objects of the issue are something like this 62.18 crores are going to be used for funding the capital expenditure quirements and 150 crores are going to be used for funding the working capital requirements."